Hey, before we get started, have you tried FreshBooks yet? You know that millions of entrepreneurs use and love FreshBooks, but have you tried it yourself? Do you yet know how much faster you could collect if you used FreshBooks? Do your customers know how much more professional you’ll look if you use FreshBooks? Try it. It’ll take a moment, and I promise you’re going to enjoy FreshBooks. Millions of other people agree with me, so it’s not just me telling you that.
And, well, FreshBooks wants to make sure that my ads are working. So, here’s what they’re doing. If you use the name Mixergy as your referral when you sign up for an account . . . well, actually if you just to do that, they’re going to pick one new person every week and give them a birthday cake. It’s their way of saying thank you to you and also their way of saying, hey, Andrew, are these ads really working?
So, give it a shot. Test them the way that they’re testing me by trying out FreshBooks for yourself and seeing on your company how much faster you could collect and how much sending invoices could be, FreshBooks.com.
Also, you know, I got an email recently from a well known, respected angel investor who said, “Andrew, I keep seeing these spots for Scott Edward Walker. Should I really email him? Should I really talk to him?” And I said, “Yes, absolutely.” How do I know? Because I’ve known Scott Edward Walker for years. I’ve worked with him. He’s been great, but more importantly I see the emails coming back from people who are telling me about their positive experiences using Scott Edward Walker, the lawyer that entrepreneurs love, especially tech startups. So, give him a call, Walker Corporate Law, if you want to find more information.
Finally, if a friend of mine came to me and said, Andrew, I want to sell something online. You know what I would do? I would send them to Shopify.com. Why? Because Shopify.com is so easy to set up they’ll never have to bug me with tech support issues and because they’re going to be so well represented online with this beautiful site that actually increases sales that it’s just going to do wonders for my reputation to be the person who inspired that and lead them to it.
All that’s to say, if you or anyone else needs to start a store online, will you please check out Shopify.com? You’re going to be grateful. You’re going to thank me, and more importantly the people whose stores get set up because of your recommendation are going to thank you, Shopify.com.
Here’s your program.
Andrew: Hey, everyone. I’m Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. This is the story of founder who used a different approach to build his business. Joining me is Phill Simon. The company he founded, Mondo Studios, is a spin-off of the company he used to work for. Mondo Studios creates games for brands, like Purina and Progressive Insurance, and he launched his business in a new way. It’s not that new, right, Phill? I don’t know if it’s been around forever, but it’s unique to my interviews, and I wanted to make sure to hear that story, to hear how you launched a company through a spin-off. Anyway, long way of just saying welcome, Phill. Thanks for doing the interview.
Phill: Thanks very much. It’s nice to be here.
Andrew: So, I want to make sure that I understand the product that you create and my audience understands it. Can you give me an example of one of the games that you created for one of the brands that you work for?
Phill: Well, about four months ago we launched a game for Progressive Insurance called Route-Rageous. If you’ve seen any of the Progressive commercials that are running right now, they have a new product that they released. It’s called Snapshot, and it’s about usage-based insurance. It’s sort of a unique product, and what they want to do is reach out to Facebook to their potential customer base, which is large. You know, everybody buys insurance, or car insurance. So we created a game that talked about this new product. It’s a Facebook game. It also is an IOS game, and they’re connected together using Facebook Connect.
The game is about building aware for this new product, and it’s a branding exercise where we . . .
Andrew: All right. It looks like we might have just lost your connection. Sorry. We lost your connection just as you were saying it’s a branding exercise and then we lost you.
Phill: There we go. Okay. We’re back again.
Andrew: We’re back, yeah.
Phill: So, it’s a branding exercise. Yeah, okay. The game’s a branding exercise. It’s also building awareness for this new product, and that’s one example of the type of product that we’re creating. We’re creating another one for Progressive right now making another game for them as well.
Another interesting success we had in the past year was we did a game for Purina and for Friskies for the cat food and commercials. But there’s this whole experience where the cat goes into the kitchen. It’s called feed the senses, and the cat has this sort of psychedelic experience when they eat the cat food. What we did was we created a game based on that campaign, based on the TV campaign. Once again, it was an IOS game and an online game, and that game has had about two and a half million plays online. So, that’s a pretty significant impact with that particular game.
Andrew: All right. So, companies hire you to create the games. They promote it to their audience, and they measure success based on, I guess, is it how many people play the games, or do they measure success some other way?
Phill: Success is measure in several different ways. That’s the really important thing about games is that the metrics that we can build into games, they’re pretty impressive. So, we can measure, obviously, how many game plays, how many plays people play of the game, how long they play the game, what they did in the game. So, those are the analytics that we gather from the games themselves, and then many times there’s another post-game process.
Like, I don’t know if you’re familiar with the . . .
Andrew: So we lost the connection. For a moment there we got a much better connection at your conference room, and you were just starting to tell us about . . . I didn’t catch the beginning part of their name, but a company called something logic and you said they do surveys.
Phill: Oh, yeah, yeah. We were talking about metrics and how we measure the success of our campaigns, one or just how many people play the game, how long they play the game. Dynamic Logic is another survey that’s done. It’s usually the post campaign survey that’s run to see if the games have had the desired effect, in terms of increasing grand loyalty or increasing the visibility or the intent to purchase.
For example, the game we did for Purina, we did a Dynamic Logic survey or Purina did one or commissioned one, and they found that the game actually changed people’s purchases, and they viewed the brand more favorably after playing the game. And so, those type of experiences are why, I think, these games are really effective.
Andrew: Why does playing a game make people feel differently about a pet food?
Phill: Well, I think if they have fun, if the experience is pleasurable, then they have a positive feeling about the brand. It’s like any advertising. Advertising can be used to change people’s behaviors and perceptions of anything, and games are advertising in this particular context. If done right, they can change people’s perceptions.
Andrew: Do you help companies spread the games, or is it basically their audiences tht ae getting your games?
Phill: Let me explain who I work for and with, and then I can explain what we do. We work with brands directly like, for example, Progressive and Purina. We work with them directly. We work with game portals like Yahoo, MSN, Wild Tangent. And then, sometimes we work with ad agencies, and we work through an agency to work with the brand.
Every one of those situations are a little bit different, but in some cases we are actually helping the companies and advising them where to put their games, what channels that they should employ to reach the people that they want to get to. We might say, you know what? Your audience here really is a high adopter of the iTouch. They are 12-year-old boys, for example. You should make a game that plays on that platform.
For example, for a lot of consumer packaged goods, it’s Facebook. We make games for the social elements, leaderboards, all the different things that you would expect to see in a social game. For certain consumer packaged goods, Facebook might be the best place that they want to communicate with their customers. We do advise our customers where to put the game, and then we help them deploy those games, that campaign, on any of the platforms that we’ve chosen.
Andrew: Gotcha. How about some numbers? How many people play these games?
Phill: Millions. You know, if a game is a hit . . . there are a couple of things to talk about first which is try to define what success is before the campaign, what metrics will you say if you’ve achieved, if you’ve had a successful campaign. And so, for example, the Purina game, it’s been played over two and a half million times and with an average play time of ten minutes which is… That’s about the entire game. It’s a mini game.
So, you reach two and a half million people, and they play the game, the entire game. That was deemed a success.
Andrew: I can’t imagine two and a half million people watching a Progressive commercial for more than 30 seconds, and even then it would be a forced experience.
Phill: Yeah, and when you start to look at those numbers, you start to see an aggregate, the amount of brand exposure you’re getting with these games. It can be pretty huge. And that game is only designed to be ten minutes.
The game we’re making for Progressive right now is a larger game, and the engagement time is designed to be a little bit longer, probably, I don’t know, 40 minutes. The game we’re working on now we’re hoping to do double what we did with Friskies, so about five to seven million plays, I think, would be about it.
Andrew: How long has it been since the spin-off?
Phill: I’m sorry?
Andrew: How long has the company been around since the spin-off?
Phill: Four, four and a half years.
Andrew: Four and a half years?
Phill: So, it’s been awhile, yeah.
Andrew: What size revenues roughly?
Phill: We run about a million bucks for five people.
Andrew: OK.
Phill: It’s about $1 million to $1.2 million in revenue. It’s just our business. We’re not venture backed, so we eat what we kill, essentially. That’s how the business works.
Andrew: And Mondo Media, what did they give you? Actually, you know what? Let’s get the story of how you got here. What were you doing at Mondo Media?
Phill: Well, before Mondo Media, I ran my own studio for awhile, and it was similar. It was a similar thing. I was doing advertising and animation. So, when I came onto Mondo Media, it was to run their animation division. We did a lot of work for Electronic Arts. We worked on the Lord of the Rings, James Bond franchise. We worked with Microsoft on Age of Empires, so we did a lot of high end 3D animation. And we also did 2D animation as well.
The idea was that it was 20 plus people, everybody sitting in front of a $5,000 work station, a quarter million dollar render form. It’s a pretty equipment heavy business, and you have to constantly invest money into your infrastructure. And then, what we were finding was a lot of that work was going overseas, Europe, Eastern Europe, Vietnam, Korea. We were producing really high quality animation, and so we were competing with those guys.
At some point we said, let’s spin off. I talked to John Evershed, he’s the CEO of Mondo Media, and I said we should just split these businesses. We took myself and two of my partners. We split off, created a new entity, and focused on advertising and focused on developing games. Basically, it allowed us to focus on our core strengths, which are game design background and advertising. It still played off of a lot of the production work and the design and the stuff that we were doing with animation. So, it was a good fit, and also it allowed us to sort of, what we thought was leave an area that was essentially in decline in terms of creating game-based animation.
Andrew: Why not launch your own business? Why spin it off instead of launching something brand new?
Phill: Well, I had a lot of goodwill and a lot of clients, and I had an infrastructure. I had people. I had artists, designers. I had my partners, and I had a Rolodex from that, and I had complete goodwill. It wasn’t like it was an acrimonious spin-off. It was a very good spin-off, and we still do work for Mondo Media. For example, we just did . . . I don’t know if you saw that YouTube copyright thing that came out a little while ago, YouTube copyright school.
Andrew: Oh, I heard about that, but I haven’t seen it, yes.
Phill: So, we did all of that animation for those guys.
Andrew: YouTube copyright school is where they send you if you have three copyright violations on YouTube, right?
Phill: I think it’s even one. It’s like traffic school. You can get a violation removed by watching this video, and then if you pass the quiz you get a strike removed. So, we did that.
Andrew: You guys created that?
Phill: Yeah, we created that with YouTube. We worked directly with YouTube, but that property, Happy Tree Friends, is a Mondo Studios property. So, the point I’m making is there’s just a lot of synergy and goodwill between the two companies, so it was easier to do that than start from scratch, I thought, at the time.
Andrew: Okay.
Phill: It’s proven to be, I think, very fruitful for us.
Andrew: All right. I might ask a bunch of really basic questions as we talk about the split just because I haven’t interviewed anyone, even though I’ve interviewed hundreds of entrepreneurs, it turns out you’re the first entrepreneur that I’m aware of that’s spun off and created a business this way. So, I want to cover as many of the basics as possible.
You started off doing essentially at Mondo Studios, or I’m sorry, at Mondo Media you started doing essentially what you’re doing at Mondo Studios at your company.
Phill: We changed direction when we split off.
Andrew: You did? Okay.
Phill: I mean, that was the whole point which was we were doing one thing at Mondo Media which was only animation. It wasn’t interactivity, and it wasn’t advertising.
Andrew: I see.
Phill: It was straight up animation. And when we spun off, we completely changed the focus of the company. I mean, it was still digital production, but it was interactive and it was game-based and it was advertising-based.
Andrew: And how did the people over at Media feel about you launching Mondo Studios?
Phill: They completely encouraged it. I mean, that was the whole point. I mean, we basically bought the company from them. We bought the company from Mondo Media, and we took the assets that we had and the clients that we had, and the personnel that we have now came with us. So, it was fine. Actually, it worked out good for everybody.
Andrew: So now the two of you own 100 percent of the business?
Phill: There’s three, there’s four partners, and we own 100 percent of the business, yeah. We formed an LLC when we spun off.
Andrew: Gotcha. And so, I see. So you paid to spin off, and in return you got people, equipment, relationships and so on.
Phill: Yeah. We had existing… we had work in the pipeline. That was the other thing. We had a couple of large jobs in the pipeline so that allowed us, instead of have to go get angel funding or break out our own check books, we had work. We had gigs. We had a revenue stream from the previous business. So we finished up the work that we were doing with them, and we transitioned to this sort of new idea that we had.
And for me, too, spinning off was . . . I knew the partners. The partners that came with me, Douglas Kay and Jana Canellos, were people that I had worked with for several years. We had history. We shared vision, and I needed people help me run the business. I’m the creative guy. I’m the creative director. I don’t run the day-to-day operations of all the pro formas and all our business relationships. Having those people with me made me have the comfort level that we can do this. We can make this business work.
Andrew: I see. All right. What’s the first project that you guys worked on? It’s one of the previous animation projects that you started when you were working at Mondo Media, right?
Phill: Yeah. I think one of the things when we first spun off, we were finishing up some work for Ubisoft. I don’t know if you remember the game, Myst, but I think it was Myst V or Myst IV. It was the last Myst that we did. So we did a bunch of work for those guys creating, I think it was, for E3. We did a bunch of work for the Video Wall and the Ubisoft booth, and that was pretty much our last big sort of animation job.
We did a couple of smaller things for Electronic Arts. It was the Superman game that was based on the movie, the Superman movie, kind of ill-fated Superman movie. But we did a bunch of work for Electronic Arts in Orlando. It’s the Tiburon Studio, the same studio that makes Madness. We worked with those guys. And those were sort of our last animation gig, and then our first interactive gig was, we worked with Dodge.
Andrew: With Dodge?
Phill: Dodge Charger, it was a release for that car, so we created a game for them. It was an online game, and we also created a kiosk that they brought to the Detroit Auto Show.
Andrew: So, how do you get Dodge as a client, and how do you pitch… Actually, let’s start off with that. How do you get Dodge as a client?
Phill: That’s interesting. Because of the relationship that I had with Mondo Media, that’s why. One of our former sales people, Suzanne McNamee works at UGO. She used to be my sales person at Mondo Media, and she went to UGO, and she said, hey, you should call these guys. I know that they’re fishing around some RFPs A lot of the work comes from an agency. There’s a request for a game, and we made that contact. And we went through a creative brief in a big process, and we pitched our idea, and they chose our idea.
Based on the strength of our portfolio and our past work, they awarded the job to us, and we’ve been working with that same guy, that guy Walt, double sign, who is at BBDO Detroit. That’s where that job came through, through the agency. Now, he’s at Yahoo, so we’ve been working with him in one shape or another for the last, I don’t know, about five years.
Andrew: Well, all right. So, did you get the introduction to them? Are they looking for games? Do they understand the power of games as advertising vehicles?
Phill: Now, yes. I think five years ago before the rise of casual games… For example, the number one downloaded category on IOS, iPhone, iTouch are games.
Andrew: It drives me nuts. I keep going in to see what the top 25 new apps are, the top 25 most popular are, they’re all games.
Phill: They’re all games, and that wasn’t the case five years ago. And five years ago, there was no Zenga. There was no Farmville. There weren’t social games that we have now. It was harder then because we has to do a lot of missionary work. We evangelize the power of these games, but now almost every proposal that we’re seeing has a specific call for a game. Everybody wants it to be viral. Everybody wants it to be social.
Andrew: Right.
Phill: You see the same buzz words over and over and over, but the games can encapsulate all of that holistically, and actually it’s not a stretch for games to be viral or to be social. Nowadays, we’re seeing requests for gaming all the time from an incredibly broad array of companies, from consumer product goods, detergents.
Andrew: Did Dodge ask for a game specifically, or were they just looking for ideas?
Phill: Dodge, actually at the time had their own gaming channel on their website. So, they had done a lot of games, actually, specifically the Dodge brand. It’s Jeeps. It’s Chargers. It’s a male focused brand.
Andrew: It kind of lends itself to games, or a lot of the games are already vehicle-based.
Phill: They had a multi spectrum gaming approach, so they were creating custom games, but they were also doing in-game advertising. They would put billboards “Need for Speed”, for example. I don’t know if they did exactly, but they were doing in-game advertising and doing custom games.
Andrew: There wasn’t much evangelizing with them. With them, it was just saying, we are good because we did it before, and we can continue to work just as well or better now.
Phill: They had made a bunch of games for the Jeep brand.
Andrew: Can you give me an example of a company that you had to evangelize and explain the process to? I want to learn how to take a new product and explain it and convince new people to actually buy it.
Phill: Well, think about insurance, car insurance, right? We started talking to Progressive, and they had a guy internally who is their sort of emerging technologies director. And he is always on the lookout for new ways to communicate with their customers. Insurance is a really long sales cycle. You don’t just run out and buy insurance. You buy insurance, and you get a new car, or your insurance is up.
That’s why you see so much insurance advertising because it’s being top of mind. When the opportunity to buy insurance, oh, am I going with Flo? Am I going with the cave man? Am I going with Aaron from Esurance? So, it’s this top of mind kind of thing.
We started with them, and we talked about a couple of different ways that we could start a relationship with them and a couple of different angles which we could create a game. The first game that we created was a game called SIU, Special Investigations Unit, and it’s about insurance fraud. This particular game was educating people about not becoming a victim of insurance fraud.
We realized that by doing some research and by talking with Progressive the number one victim of insurance fraud is older women. Somebody crashes into them, and it’s a fake accident, right? Because of that, we realized huh, what kind of games are these women playing? Well, at the time hidden object games were really huge in the casual game segment, so we created an object game that sort of had a SIU kind of bent where you helped bust this ring of insurance fraud scammers. That game, it’s still up. It’s still on Yahoo.
Andrew: Older ladies were playing it?
Phill: Yeah, well, yes. They did because older women play a lot of hidden object games. It’s the number one casual gaming genre or game mechanic, and that’s who plays them
Andrew: Interesting.
Phill: Games like Ravenhurst and things like that.
Andrew: How did you convince Progressive to try it? I mean, you saw a reaction from me, even though I knew that it worked because you’re telling the story about it. I still say that older ladies are going to respond to this? How do you convince a customer who might have the same reaction who needs to give up cash?
Phill: Well, a couple of things. You hit upon one big point. In terms of what Progressive does advertising-wise, creating a game is not inconsequential it’s money, but in terms of the kind of money that you’re going to spend to do that versus advertising on the front page of Yahoo or doing a national TV spot or doing banner ads ubiquitously all over the web, it’s very cheap compared to those other kind of campaigns.
Andrew: I see.
Phill: So, the barrier to entry in terms of spending money is pretty low. And then, the other part of it to convince them was talking about the reach that games have. Hey, look. Look at this game on PlayFish, how many people are playing hidden object games? Look at how many downloads these games get. Look at how many plays these games are getting.
For example, this game originally ran on Yahoo Games. So, Yahoo Games also was instrumental in saying every day 25 million people come to Yahoo Games and play games on this destination. You should create a custom game here.
We had the metrics to back it up in terms of how many people are playing those games, and then the creative fell into line. It sort of meshed with one of the things that they wanted to talk about, and it was a natural extension.
Andrew: OK. So, I get how you explain it to them and how you got them on board. How about another example? I’m curious about how new products are sold to companies that are a little skeptical.
Phill: Well, Purina is an interesting example. They have done games in the past. They’ve done gaming-based initiatives in the past. What they wanted to do was they wanted to extend the campaign that they were currently running on TV. That was the “Feed the Senses” campaign I alluded to before, and they were looking for different ways to do it.
They have a digital strategy. They have a portfolio of things that they’re doing. They have Facebook pages, Fan pages. They have banner ads. They’re doing advertising within like, People Magazine on the iPad. So, they have a digital strategy, and creating a game for them was a natural extension of what they were already doing. The thing for that was not necessarily convincing to do a game, but striking the right balance with the game that felt like it was a natural, organic part of the campaign that they had already running.
So, that was the balance in that one. It wasn’t so much convincing them to do a game, it was convincing them what kind of game we would make and how we would carry that brand messaging through the game.
Andrew: We’re talking about evangelizing. We’re basically talking about going to people who are looking to be evangelized to and making it easier for them to say yes.
Phill: Yeah. I’m usually talking to people who are somewhat receptive to creating the game. I
Andrew: You’re not going to See’s Candy and telling them they need to make a new game.
Phill: Well, one of the largest gaming sites online is called Candy Store, and I think it’s for . . . who makes Lifesavers? Is that Wrigley? Yeah, it’s Wrigley. It’s huge. Gaming is huge in the candy segment. I think it would be harder to say, well, let’s make a game about… Actually, we’ve done pitched for medical devices and things like that, health care…
Andrew: I was picking See’s Candy because they seem to pride themselves on being old-fashioned. I don’t see their billboards or commercials or website or anywhere.
Phill: That’s true, yeah. Every case is different. Every brand is going to have a different promise. Every brand is going to have a different ethos and sort of mythology around it. And so, I think what you’re saying though if you say old-fashioned See’s Candy, what we really strive to do and what I think our differentiator is is that we’re not just going to slap some logo on a basketball game with See’s Candy and say, hey, it works.
It’s advertising, so it’s understanding that brand, the message that they have, who they want to talk to, and creating a game that is relevant and the messaging in this game feels true and feels authentic versus just some kooky game with See’s Candy slapped on it.
Andrew: You and I before the interview started talked a little bit about the gamification of things.
Phill: Yeah.
Andrew: And you’re noticing that more things are being gamified and that there are certain ways of doing it well and ways of doing it poorly. I’d love to know how to do it right, but maybe, first, let’s explain what gamification means and then jump into teaching us how to do it right. What is gamification?
Phill: Well, it’s a term that sort of cropped up recently. It’s about, for example, Foursquare is a game, and the success of Foursquare has led a lot of people to really think about this topic. It’s a way to connect to your audience. In our case, it’s consumers, but it could be your audience in a different respect as well with elements that encourage repeat visits, coming back over and over and over again. Getting them into… I would call it . . . well, some people call it a compulsion loop, but basically you’re compelled to come back and to check in or to check your crops or to see how your city is doing.
Those are done by creating elements in the game, like leaderboards, badges, achievements, ways to chart your progress through the game and getting a sense of satisfaction that you’re moving up through this environment and that usually there’s some sort of physical manifestation of your progress. I’m the mayor of, you know, whatever, my coffee shop, or look at my city. Look at how cool it is.
And so, it’s a social situation, what you’re sharing, what you’re doing with friends, and you’re creating a sense of community and also a sense of individual status. And so, that can be something like, you know, there’s examples of frequent flyer programs or something that’s not necessarily a game per se or something like the McDonald’s Monopoly things that they do on the cups.
There’s lot of different ways to inject gaming elements into how you communicate with your customers and how you keep them engaged. And so, I think people are just looking at the success of things like . . . there’s more people playing Farmville every day than are on Twitter, you know, I mean so, just the sheer numbers of it. People are starting to take notice, and it’s sort of a pop culture phenomenon.
Andrew: There we go. The camera just paused here for a moment. I’m watching it, too, and I’m sure everyone in the audience is watching it and saying, I want to add those kind of compulsion elements to my product. And you started talking about some of them. Let’s go over some others. You’ve got leaderboard. You’ve got… What else was there?
Phill: Badges.
Andrew: Badges, right.
Phill: Achievements, social elements to keep people engaged, whether they’re badges, achievements, leaderboards, ways to chart your progress through the experience so that there’s usually some sort of currency. Most of these games have a currency. You can buy things. You can sell things. You can trade things with friends. That’s the other important part, too, is gifting, being able to give somebody a present.
The more people are engaged with you in the game, the more things you can do in that game. You’re not going to be able to achieve certain things unless you have enough sort of critical mass with friends. So it encourages just by its very nature. It’s a viral experience. You can attach that.
You can’t just glom that on to any business and any website, but if you think about it correctly, you can create a sense of community with these games. But you have to do it carefully because like bad advertising, if you see a terrible ad on TV or anywhere that offends you or is just poorly done, it’s not going to help the brand. It’s going to affect your perception of that brand negatively. So, care has to be given to the creation of these campaigns.
Andrew: As you were giving a list and you said leaderboard, badges, charter of progress, I was thinking school and thinking why is it that school isn’t more fun if it has that. And then, you started talking about currency and the ability to trade and gift, and I started thinking well, if school had that, I wonder if it would be more fun.
Phill: I’ve seen some interesting articles about that actually, about bringing… Well, a lot of schools are creating some sort of game-based curriculum, and Apple has been really smart in terms of penetrating the education field. If you go to most schools, a lot of them . . . I don’t know if it’s a majority, but I’ve seen a lot of K through 12 Apple inspired equipment because Apple’s had an outreach into that area. And you’re seeing more and more stuff for the iPad.
So, I think you could actually do that. At my son’s school they have this . . . they’re called Smart Boards, and it’s sort of like this tricked out white board that has a project system, and it has sort of like, I wouldn’t say it’s tracking but you can draw on the board, and it connects to the computer. And they’re using that more and more as a teaching aid. I think you will see the gamification of education in the future.
Andrew: Can you give me an example of how you gamified a game, how you made it more social, more compulsive, more interactive?
Phill: Well, when we did the Route-Rageous game and it’s a puzzle game where you have to figure out how to get your car through this little maze and you have to drop out these little markers. Basically, the idea is the smarter you drive, the better you do in the game, right? That game has a leaderboard. It shows the top player. It shows the top players of the week, the top players of all time. It also has the player of the week as featured prominently on the page, so the top player. It has all different badges and achievements.
The badges that we put into the game are how many levels you get a badge, if you play a certain amount of levels concurrently or in a row. We have badges for the top scorer, badges for specific events within the game. We don’t reveal all of those to the player so not all of them are necessarily… You don’t know how you achieve some of the badges, so it makes people explore the game and try to collect them all. You know you have ten badges. You have an inkling of what they do, but you’re not exactly sure how to get them all. So that’s one way to dangle this carrot out.
Andrew: I see.
Phill: You get them all, and then the people have to go find them. The other thing we did was we created a series of what we call taunt videos which are these really snarky videos that you can send to your friends, and they pop up in YouTube, and it’s a little video. It’s basically just dissing your friends and basically encouraging them to try to beat your score. We’re sort of using a carrot in one respect, and then sort of a little taunting in another sort of a na, na, na, na, na, I’m doing better than you are. Those are two elements that we put in that game, and in the game we’re working on now we’re expanding some of those concepts to make it more social and more viral.
Andrew: All right. I want to talk now a little bit about spinning off properly, but I had one other question here that I wanted to come to before that. When you bought out your company, when you spun it off, did you pay for it using future earnings, or did you have to pay up front?
Phill: You know what? We paid over time. We agreed upon a price to spin the company off, and we paid off our debt, our indentured servitude, over the course of, I think it was, I think we’d done it in the first year and a half. We paid them as we’d go. We figured this is what we’re going to pay monthly, and we worked out a payment plan with Mondo Media, and we paid them from the revenues that we generated.
Andrew: Do you think this is a viable option for others who are working at companies that are kind of in the area that they’re interested in but not fully? Does it make sense?
Phill: In some sense yes, in some sense no. I mean, leave, start your own company. I started before doing this… We started doing our own company just on our credit cards, and it wasn’t a spin-off, right? In some cases, spinning off, if it’s not acrimonious, if you’re not spinning off because you’re getting kicked out of the company but you’re spinning off because you have an idea and you have a direction that might not mesh with the company that you’re spinning off from. But you can spin off from them and do it in a way that kind of leveraging your strength, I think it’s a smart move.
In one way, it’s like the devil you know, right? You know if you’re going to be bringing people with you, you have people, you have infrastructure, you have clients. You sort of know what you’re getting yourself into versus jumping out there and starting from scratch because it can take.. Just doing a startup and I’ve been involved in a lot of . . .
I worked at Macromedia when it was pre-IPO and when it was 50 people. Just to get from zero people to 50 people is an incredible feat, and then to go public is even a greater feat. It can take you just walking around in the weeds for three or four months to figure things out and get momentum. When you spin off, you have momentum instantly.
Andrew: Yeah.
Phill: That’s just one thing, so getting some momentum and getting some gravity behind your company and moving it forward, that’s the one benefit. But if it’s some acrimonious thing and you’re spinning off because it doesn’t work with the other company, I don’t know if that’s worth it then. I think you should start another company.
Andrew: I see. That makes a lot of sense. If you’re pissed off at your boss, this isn’t the right option, but if you’re just thinking of a new direction . . . what’s impressive to me is day one, you weren’t thinking about how you were going to feed ourselves, how are we going to make this work. What did we do on day one? Day one, you knew what you were doing. You were finishing up a project that you started off back before you spun out. What else do we need to know about doing it right?
Phill: Well, I think you touched upon one point which is I’m not 20 years old anymore. So, I had obligations like family, mortgages and all those other things, right? For me, I could see the revenue stream right there. So, I had a very clear path. I can continue this business. Here’s the continuation of it, and I can leave without a big hiccup.
I think another big thing is when you’re setting up a company and you’re doing your whatever, your articles of incorporation or you’re doing an LLC and you have a partner’s agreement, understand who you are going into business with. Prepare for the eventualities in terms of what’s going to happen with your other partners because it’s not just you. It’s the other people forming the company. So, set it up right in the beginning. I think that’s one really important thing.
My partner, Douglas Kay, has an extensive business background. He worked at Lucas Arts for a long time, and he also worked at ILM. For me, it was having the sort of three legs of the stool, creative, business and producing. So, having your team together and one leg isn’t going to do it. You need to have a balanced approach. And so, when I spun off, I had people with me that I knew I could count on and that I knew could hold up the other ends of the bargain essentially.
Andrew: Any issues around, maybe, people at the previous company treating you like you’re still there and expecting things that they would have if you were still working for them?
Phill: No, not at all. I have a really good relationship with John Evershed, and we share resources from time to time. Like I said, we did that thing for them for YouTube. We trade designers. Sometimes, some of the guys there work with us. We work with them. So, that hasn’t been a problem. If I hadn’t have paid them, and maybe if I had defaulted on my debt, it would have been an ugly situation. But, no, it’s been great, and I think it’s a testament to my relationship with John and the people at Mondo Media, but I had worked for them about five years before, so we had a solid relationship. And even before working with those guys, I’d known John for about five years before that professionally.
Andrew: Gotcha. All right. Any other last bit of advice for entrepreneurs that are listening to us?
Phill: Well, I’ve done a lot of different things. I started out at Pulse, I mean, Paracom. We were acquired by Macromedia. Macromedia went public. I’ve been through a lot. I’ve been through other companies, and that one worked, right? Cool. We all made money. But I’ve been through some that haven’t.
So I think, when you start your own company and you’re starting your own venture, obviously, you need a clear vision. You need to have some reality behind your business. I think you need to have some pro forma, some way to look at your business that’s based in reality in terms of what kind of revenue you think you can generate. I think you need to be prepared to stick with it and surround yourself with people that you trust and that you want to be with every day.
I mean, you’re going to be doing this, immersed in this. This is your life. This is your business, and if you don’t like the people that you’re with, it’s going to suck and it’s not going to be any fun. And so, I’ve always tried to surround myself with people that I’d want to hang out with as much socially as I would at work. Life’s too short.
Andrew: The company is Mondo Media. Phill, thanks for doing the interview.
Phill: Thank you. Mondo Studios.
Andrew: Oh man, I highlighted Mondo Media to talk about earlier which, of course, I did.
Phill: No worries. It’s no worries.
Andrew: Why didn’t you guys come up with a totally different name? Why make it sound similar to the past company?
Phill: Because, you know, that was a big debate internally because the name had a lot of recognition.
Andrew: I see.
Phill: It had name recognition. I think if we had changed it, I don’t know if it would have mattered. But it had a certain cache, and we said, you know what? It’ll still open doors for us. So, we had some explaining to do. It sometimes was a little awkward, but yeah, we kept it because we felt that it had value.
Andrew: All right. I get it.
Phill: What just happened there happens all the time.
Andrew: Mondo Studios. Thank you, Phill, and thank you all for watching.
Phill: Thank you, Andrew. Bye.
